DerryNews.com, Derry, New Hampshire

Online Extras: News to Note

August 30, 2012

Social security's woes are worse than you think

(Continued)

Benefit levels for people in the middle of the income spectrum, meanwhile, could be set so that they more than keep up with inflation but don't rise as much as currently scheduled.

It's easy to attack this sort of proposal. In the past, opponents have said, for example, that it would be a draconian 40 percent cut in benefits for high earners. That's true, when the proposal is compared with the benefit levels that the law has scheduled but hasn't figured out how to pay for. Compared with today's benefit levels, though, it's not a cut at all.

Democrats will prefer to raise taxes, especially on high earners, to let benefits grow faster. The drawback to this approach is that higher payroll taxes, the CBO has found, discourage people from working and saving. We would be taking a hit to economic growth for a purpose — boosting benefit levels for relatively well-off seniors — that shouldn't be a high social priority. It seems perverse to raise taxes on high earners to finance higher benefits for them.

Just to have that argument over taxes and benefit levels would be progress. One way or the other, we need to get Social Security's finances in order, instead of acting as though there's no problem to be solved.

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